For the fourth quarter, total revenue from continuing operations increased 6% to a record $37.1 million compared to $34.9 million for the fourth quarter of 2007. RA sales increased 3% for the fourth quarter of 2008 to $25.8 million compared to $25.2 million for the fourth quarter of 2007. Sales of Acute Care products increased 8% for the fourth quarter of 2008 to $27.2 million compared to $25.2 million for the fourth quarter of 2007.
The loss from continuing operations before income taxes for the fourth quarter of 2008 was $1.4 million. The $1.4 million loss amount included $1.6 million of loss contingency that the Company accrued in connection with ongoing litigation, which is recorded as part of certain litigation and insurance charges, and a noncash charge of $380,000 related to the impairment of intangible assets. Excluding the loss contingency and noncash impairment charge, the loss from continuing operations before income taxes for the fourth quarter of 2008 would have been approximately $615,000 in income from continuing operations before income taxes, as shown in the attached reconciliation table. This compares to a loss from continuing operations before income taxes for the fourth quarter of 2007 of $4.5 million, which included a noncash impairment loss of $6.1 million on the common shares of InfuSystem Holdings, Inc., formerly known as HAPC, Inc., owned by I-Flow.
“In the face of the negative impact of the economic downturn on hospital admissions and the lower volume of surgical procedures, I-Flow’s financial performance for 2008 is a noteworthy accomplishment. We delivered revenue growth and profitability before income taxes and special charges for the fourth quarter and 2008 as a whole and were cash flow positive for the fourth quarter. Our solid performance in a weak environment speaks to the value that healthcare facilities, surgeons, anesthesiologists and their patients place on our ON-Q products for relieving post-surgical pain and reducing narcotic use after surgery, and is a tribute to the effectiveness of our sales and marketing organization and the entire I-Flow team,” said Donald M. Earhart, chairman and chief executive officer.
Earhart noted that at December 31, 2008, I-Flow had more than $48 million in cash, cash equivalents and short-term investments, long-term liabilities of $6.0 million, and total liabilities of $29.1 million.
“Hospitals today face unprecedented financial, economic and government pressures that present unique opportunities for ON-Q. More than 80 clinical studies published or presented over the past few years have documented the significant reduction in narcotics intake and significantly better pain relief when ON-Q is used to manage post-surgical pain. Many of these studies also show that the use of ON-Q is associated with shorter hospital stays, a benefit that is increasingly important in today’s cost-conscious environment, and the possibility of fewer hospital-acquired infections, a benefit that has gained urgency with the recent implementation of the new rule for Centers for Medicare and Medicaid (CMS) reimbursement related to hospital-acquired conditions or never-events. Our sales team is using these compelling clinical study findings and ongoing evidence-based medicine results to educate hospital administrators and case managers in addition to the surgeons our representatives traditionally call on about the contributions ON-Q can make toward improving patient outcomes, reducing costs and increasing hospital efficiency,” Earhart said.
AcryMed, a developer of innovative infection control and wound healing products the Company acquired on February 15, 2008, contributed revenue of approximately $1.4 million for the fourth quarter of 2008 and $5.2 million for the year. “The integration of AcryMed is a giant step toward achieving our vision for I-Flow as an integrated Acute Care products company that develops and markets proprietary disposable medical devices that improve patient outcomes. We are confident that our dedicated sales and marketing organization will be just as successful in selling new products from the AcryMed pipeline in the emerging acute care market as it has consistently been with our ON-Q products in the large and growing market for post-surgical pain relief. We also plan to take advantage of new revenue opportunities from licensing AcryMed products and technologies that are not within our core competencies.”
2009 Guidance
Earhart concluded, “Market conditions remain highly volatile and difficult to predict, making the job of forecasting the future more challenging than usual. Therefore, we currently expect I-Flow to be profitable in 2009, excluding any special charges, and cash flow positive on growth in total revenue of approximately five to seven percent, including growth in RA of approximately five to ten percent.”